TVI Pacific Inc. and Mindoro Resources Ltd. Announce Robust Economics for the Agata High-Iron DSO Project
TSX: TVI OTCQX: TVIPF
TSXV: MIO ASX: MDO FFT: OLN
CALGARY, Sept. 10, 2013 /CNW/ - TVI Pacific Inc. (TSX:TVI) (OTCQX:TVIPF) (TVI) and Mindoro Resources Ltd. (TSXV:MIO) (ASX: MDO) (FFT:OLM) (Mindoro) announced today a National Instrument 43-101 compliant Feasibility Study indicating robust economics for a direct shipping ore operation ("DSO") of the high iron laterite resources at the Agata Project, located in Agusan del Norte, Mindanao, the Philippines.
Highlights:
- Low initial start-up capital of US$10.1 million, high Internal Rate of Return (IRR) of 187% and payback within first year of operation;
- Post-tax Net Present Value (10% discount) of US$37.9 million;
- DSO product to grade 48% Fe and 0.9% Ni. - a consistently in demand product;
- Remaining infrastructure development planned for Q4, 2013;
- DSO to China planned to commence in Q1, 2014.
- Shipping rates to accelerate to 2.5M wet metric tonnes per annum in 2015.
"Completion of the Feasibility Study is a major milestone in developing new cash-flow opportunities beyond TVI's producing Canatuan copper-zinc mine," said Cliff James, Chairman and President of TVI Pacific. "The study demonstrates robust economics that provide a path towards further development at Agata and advancing our goal of eventually building a nickel processing plant."
"We are extremely pleased with the robust results of the Agata DSO Feasibility Study and the progress achieved by the operator, TVI, to date. The Agata DSO project provides a unique opportunity to generate revenue in early 2014 and to start rebuilding value in our company. We also look forward with keen anticipation to the results of the Agata Processing Feasibility Study expected in early 2014", said Tony Climie, CEO of Mindoro.
TVI and Mindoro Joint Ventures
TVI and Mindoro have signed four joint venture agreements, previously announced on October 1, 2012, relating to the Agata and Pan de Azucar mining projects located in the Philippines. The joint ventures present TVI and Mindoro with multiple growth opportunities for near and medium-term cash flow. Mindoro has 75% interest in the projects and an option to acquire the remaining 25% interest from a private Philippine company. TVI may earn up to a 60% interest from Mindoro and is operator of the projects.
Mining opportunities at Agata include:
- near-term high-iron laterite direct shipping ore operation (DSO);
- near-term limestone DSO;
- medium-term lime production facility;
- medium-term nickel-processing plant.
Economic Assessment
Below is a summary of the Agata DSO feasibility study economic assessment:
Table 1: Summary of Economic Results
| High Iron Limonite DSO sale price (FOB) | USD/wmt | $22 |
| NPV (10% discount rate) post-tax | USD (M) | $37.9 |
| Payback Period | Years | 1.0 |
| IRR post-tax | % | 187% |
The High Iron limonite DSO sale price of US$22 per wet metric tonne (wmt FOB) is 10% lower than the average sale price realized by off-takers shipping similar ore over the past 18 months.
Capital and operating cost estimates have been developed to ±15% precision. The inputs to the Feasibility Study were developed by Dallas Cox, MAusIMM (CP), of Crystal Sun Consulting Limited, based on estimates from local Philippine contractors, TVI's current suppliers and service providers.
Installed capital cost estimates include the Port Loading Facility, general infrastructure, mining-related capital costs, duties and taxes for equipment, sustaining capital and an estimate of working capital. A 10% contingency has been allowed within the capital cost estimate.
Operating cost estimates include mining, infrastructure, government charges, royalties, administration, security, community relations and environmental costs. Cash flows are calculated on an after-tax basis applying the current Philippine taxation regime.
Mineral Reserve Estimate and DSO Production Targets
The National Instrument 43-101 Compliant Mineral Resource estimate for the Agata Nickel Project, released on April 10, 2013 (available on www.sedar.com; www.tvipacific.com; and www.mindoro.com), forms the basis of the Mineral Reserve estimate for the Feasibility Study and the following DSO production targets:
Table 2: DSO Production Targets
| YEAR | wmt | Ni% | Fe% |
| 2013 | - | - | - |
| 2014 | 2,000,000 | 0.9 | 48.0 |
| 2015 | 2,500,000 | 0.9 | 48.0 |
| 2016 | 1,800,000 | 0.9 | 48.0 |
| 2017+ | 500,000 | 0.9 | 48.0 |
The resource estimation method applied to the Mineral Resources was ordinary kriging. Cut-off grades applied were 0.5% nickel within the Limonite zone and 0.8% nickel within the Saprolite zone.
The Mineral Reserve estimate in the table below, based on open-pit optimization and designs by Dallas Cox, reflects the economic parameters in the Feasibility Study and is expressed in both dry metric tonnes (dmt) and wet metric tonnes (wmt).
Table 3: Agata North Mineral Reserve Estimate - as at August 30th, 2013
| Classification | Horizon | M (dmt) | M (wmt) | Ni% | Co% | Fe% | Al% | Mg% | SiO2% |
| Proven | Limonite | 0.18 | 0.26 | 1.00 | 0.11 | 47.1 | 3.0 | 1.6 | 5.6 |
| Probable | Limonite | 6.61 | 9.44 | 0.93 | 0.11 | 48.3 | 3.4 | 0.5 | 3.0 |
| Proven + Probable | TOTAL | 6.79 | 9.70 | 0.93 | 0.11 | 48.0 | 3.4 | 0.5 | 3.0 |
Capital and Operating Costs
The project capital and operating costs are presented in Tables 4 and 5:
Table 4: Capital Cost Estimate for Agata Nickel DSO Project
| Description | Capital Costs (Million USD) |
| Mobilisation | 0.15 |
| Site Preparation | 0.04 |
| Road Construction/Upgrading/Widening | 1.14 |
| Causeway Construction | 2.62 |
| Building Construction | 1.89 |
| General Services and Transportation | 0.21 |
| Mechanical/Electrical Equipment | 0.07 |
| Laboratory and Equipment/Apparatus | 0.24 |
| Office Equipment | 0.06 |
| Miscellaneous Services | 0.20 |
| Subtotal | 6.62 |
| Working Capital | 2.64 |
| Sustaining Capital | 0.95 |
| Subtotal | 3.59 |
| Contingency | 0.93 |
| VAT Payable (@ 12%) | 1.31 |
| Total | 12.45 |
Table 5: Operating Cost Estimate
| LOM Cost (Million USD) |
USD /wmt shipped |
|
| Mining & Haulage Cost | 33.5 | 3.45 |
| Ore Drying | 6.5 | 0.67 |
| Stockpile Load & Haulage Cost | 16.8 | 1.73 |
| Barging | 21.7 | 2.24 |
| Roads, Drainage and Rehabilitation | 9.7 | 1.00 |
| G&A | 17.9 | 1.84 |
| Fees & Royalties | 7.5 | 0.78 |
| MPSA Compensation & Rates | 3.0 | 0.31 |
| VAT Payable (@ 12%) | 10.9 | 1.12 |
| TOTAL OPERATING COSTS | 127.4 | 13.14 |
Port Loading Facility and Infrastructure
The close proximity of the planned Port Loading Facility to the ore stockpile (3.5km) will provide a significant economic advantage through low transportation costs. The Port will consist of a causeway extending approximately 160m offshore and will allow two barges to be moored and loaded simultaneously.
DSO Market
The region in which the Agata DSO Project is situated, in north-eastern Mindanao, hosts approximately fifteen DSO operations at present that cumulatively exported 17.3 million wmt and 19.2 million wmt in 2011 and 2012, respectively.
Over the past 18 months the High Iron DSO sale price has fluctuated between USD $15/wmt and USD $34/wmt. The recent and historical price of High Iron Limonite DSO has been a function of supply and demand, but influenced by seasonal weather patterns in South East Asia. DSO projects on the sheltered west cost of the Mindanao peninsula, where Agata is situated, can ship ore 12 months a year and take advantage of peak season prices.
Technical Report and Independent Qualified Persons
A National Instrument 43-101 Technical Report is available on SEDAR at www.sedar.com and on TVI and Mindoro's websites at www.tvipacific.com and www.mindoro.com.
The Agata North DSO Feasibility Study has been prepared under the direction of Dallas Cox, an independent qualified person, with contributions from Mark Gifford and Michael Conan-Davies; independent qualified persons as defined by National Instrument 43-101 (Canada). Messrs Cox, Gifford and Conan-Davies have authorized the technical information detailed in this release.
Dallas Cox, MAusIMM(CP), a qualified person as defined by National Instrument 43-101, has reviewed and verified the disclosure of the Mineral Reserve Estimate in this news release. Mr. Cox has over thirty years of experience which is relevant to the activity he has undertaken and he has consented to the release of the pertinent information in the form and context in which it appears.
Mark Gifford, FAusIMM, a qualified person as defined by National Instrument 43-101 has reviewed and verified the disclosure of the Mineral Resource Estimate in this news release. Mr. Gifford has over twenty- six years of experience which is relevant to the activity he has undertaken and he has consented to the release of the pertinent information in the form and context in which it appears.
Michael Conan-Davies, MAusIMM(CP), a qualified person as defined by National Instrument 43-101 has reviewed and verified the disclosure of the Economic Assessment in this news release. Mr. Conan-Davies has over fifteen years of experience which is relevant to the activity he has undertaken and he has consented to the release of the pertinent information in the form and context in which it appears.
About TVI Pacific Inc.
TVI Pacific Inc. is a Canadian resource company focused on the production, development, exploration and acquisition of resource projects in the Philippines and Southeast Asia. The Company produces copper and zinc concentrates from its Canatuan mine and is advancing its Balabag Gold-Silver project. TVI is a participant/operator in several joint venture projects in the Philippines and Papua New Guinea and also has an interest in an offshore Philippine oil property.
About Mindoro Resources Ltd.
Mindoro is a Tier 1 Issuer trading on the TSX Venture Exchange (MIO), Australian Securities Exchange (MDO) and Frankfurt Stock Exchange (WKN 906167). Mindoro has a 75% interest, and an option to acquire the remaining 25%, in the Agata Nickel Project, Mindanao, and the Pan de Azucar Sulphur-Copper-Gold Project, Iloilo. TVI Pacific Inc. has the option to earn up to a 60% interest in these projects by meeting the earn-in requirements outlined in the September 27, 2012 release. Mindoro also holds a 53.3% stake in ASX listed Red Mountain Mining (ASX: RMX), which has a 100% direct and indirect interest in the Batangas gold and copper-gold projects.
The Toronto Stock Exchange has neither approved nor disapproved of the information contained herein.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
IMPORTANT INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this news release constitute forward-looking information. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "intend", "could", "might", "should", "believe", "schedule" and similar expressions. Forward-looking statements include, but are not limited to, commencing development of the infrastructure for the Agata North DSO Project plans to commence direct shipping of high iron limonite ore to China in the first quarter of 2014, and other statements that are not historical facts. Forward-looking statements are based upon the opinions and expectations of TVI and Mindoro as at the effective date of such statements and, in certain cases, information received from or disseminated by third parties. Although TVI and Mindoro believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions and that information received from or disseminated by third parties is reliable, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties (known and unknown) that could cause actual outcomes to differ materially from those anticipated or implied. These factors include, but are not limited to, such things as general economic conditions in Canada, the United States, the Philippines and elsewhere; volatility of prices for precious metals, base metals, oil and gas; commodity supply and demand; fluctuations in currency and interest rates; inherent risks associated with the exploration and development of mining properties; inherent risks associated with the exploration of oil and gas properties; ultimate recoverability of reserves; production, timing, results and costs of exploration and development activities; political or civil unrest; availability of financial resources or third-party financing; new laws (domestic or foreign); changes in administrative practices; changes in exploration plans or budgets; and availability of personnel and equipment (including mechanical problems). Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this news release and such forward-looking statements should not be interpreted or regarded as guarantees of future outcomes.
The forward-looking statements of TVI and Mindoro contained in this news release are expressly qualified, in their entirety, by this cautionary statement. Various risks to which TVI, Mindoro and their affiliates are exposed in the conduct of their business are described in detail in TVI's and Mindoro's Annual Information Forms for the year ended December 31, 2012, which were filed on SEDAR on March 19, 2013, and April 1, 2013, respectively, and are available at www.SEDAR.com. Subject to applicable securities laws, TVI and Mindoro do not undertake any obligation to publicly revise the forward-looking statements included in this news release to reflect subsequent events or circumstances, except as required by law.
SOURCE: TVI Pacific Inc.
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